If our old friend, and my mentor, the late Sen. Ted Stevens were with us today, he would have a short and direct solution to the extended deliberations of the Alaska Legislature and governor. It would be: “Just do what’s right for Alaska.” And he might add a few expletives.
It’s past time for our governor and a majority of our legislators to recognize the responsibility of each of them to represent the current as well as the long-range interest of Alaskans. This can only be done by making timely decisions based on sound and established financial principles.
This Legislature has been in session since January of this year. As of May 19, they were in special session, and the governor has indicated his intention to call yet another special session for August.
The inability to resolve our budget deficit, while proposing to enshrine the dividend in the constitution, clearly points out the lack of discipline to separate sound judgment from political expediency. It won’t be any easier in August than it is now.
Let’s face the fact, folks. Alaska does not have the available funds to pay a dividend anywhere near the $2,400 which the governor proposes. To do so would curtail state services to a point of catastrophic proportions in education, health care, public safety, the ferry system, children’s protective services, Medicaid, etc.
To overdraw the Permanent Fund beyond the 5% of its market value as set by the Legislature in 2018 to pay the dividend would be a mistake. We have already depleted our Constitutional Budget Reserve Fund. Once we start on the path of overdrawing the Permanent Fund beyond a 5% annual withdrawal, we would be on a path to no dividend and to state share to fund public services.
To suggest that Alaska will pick up more revenue from the sale of oil is wishful thinking. Oil prices go up and down with the Mideast setting the world price because they control much of the supply.
Meanwhile, Alaska’s stock portfolio earnings can be affected as the U.S. economy and stock market fluctuates.
The state could issue bonds to fund its deficit, but the bonds have to be paid back. Repayment must come from cutting the cost of government, growing the economy or new taxes. The Feds don’t have that problem; they just print more money and it’s called inflation.
The logic of enshrining the dividend in the state constitution is in itself absurd. This could place the payment of any dividend before needed services for Alaskans.
The governor and the Legislature have the obligation to identify how to fund government without jeopardizing the Permanent Fund. The dividend is a legitimate benefit for Alaskans, but to repeat only if our state can afford it.
Unfortunately, that is not the case today. We have a deficit, even though we are cutting public services while taking more of the Permanent Fund earnings to fund state government. Almost in the same breath we are talking about increasing taxes. It is senseless to give away money as a dividend and then turn around and tax the same Alaskans and then call it a revenue source.
Some legislators have suggested a tax based on a percentage of an individual’s federal income tax, but the truth is we have little private wealth in Alaska. The real wealth comes from production of public resources. Alaska’s land is primarily owned by the federal, state, municipal and regional Native corporations, and you can’t tax government entities.
Passing out free money (which the dividend is) certainly builds a political constituency. But as Sen. Stevens would say, “That’s NOT right for Alaska”
Frank Murkowski served as governor of Alaska 2002-2006, and as U.S. senator 1981-2002.
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